TMTB EOD Wrap
Good afternoon. QQQs +1.8% now up close to 20% YTD. MU +19% the big winner today — with MU 3.8% of the QQQs, it makes it responsible for 40% of the QQQs move today as it hit $1T market cap on 75M shares traded. Lots of questions on why the big move — we’ll dive in more on the move below and the current debate on the stock. Semis +5.5% led the way higher as the HOT AI SUMMER Vibes continue in full force with lots of 5%+ moves across the space. App sw the big laggard today.
Post-close:
SMTC +5% looks solid with a nice beat and raise hitting bogeys and more. Q1: $291m/$0.51 vs $283.5m/$0.45 and bogeys closer to $290…EBITDA: $66.4m vs $58mn…GM: 53% vs 52.6%….Q2 $323-333m/$0.59-0.63 vs $300.7m/$0.52 and bogeys closer to $310M..EBITDA $79M vs street at $63M.
Crowded stock, but this should be more than enough despite SMTC’s tendency to be volatile T+1.
PR: “Semtech is off to an exceptional start in fiscal year 2027, delivering record quarterly results and expanding design wins across our data center and LoRa businesses,” said Hong Hou, president and chief executive officer. “As FiberEdge and CopperEdge 1.6T revenues layer onto our strong growth base, we expect data center growth to accelerate throughout the year. The strength and depth of our bookings and backlog, a broad and well-positioned product portfolio, and targeted R&D investments aligned to customer roadmaps give us strong conviction in our growth trajectory ahead.”
ZS -18% after NNARR inline for Q3 ($166M vs $165M). The FY guide only passed through part of the beat vs. street (Raised FY ARR at midpoint by ~$7m less than the F3Q beat.), which implies substantial decel. Co also said 16-17% ARR growth for FY27 which is below expects of 17-18%. Laggard trade dead in the water and lower FY27 should fan bear fears of competition/lack of organic growth.
AI/SEMIS
MU +19: Lots of questions why such a big move — it doesn’t happen often (or at all) a stock with a cap near $1T moves 20% outside of earnings, but we’ve been in unchartered territory in AI semis for a few weeks now. We did get a couple positive sell-side notes: Arcuri at UBS wrote a bullish note raising his PT over $1k to $1,625 reiterating the bull case around LTAs and memory as a more strategic part of the DC stack. MU also had a recap of meetings with management taking up numbers. Add in some vague posting by Thrive’s Joshua Kushner (This is the cover of Daft Punks album “Random Access Memories”:)
Sprinkle in Trump calling the company out at a rally in NY last week. And add on that high level the big chase going on in semis among LOs who don’t want to underperform benchmarks. The memory trade feels like the first truly global equity “meme” trade I can remember — the thematic trade remains the most favored among specialists, generalists and retail in the U.S. and abroad. Lots of support from large Tech funds in the trade as well.
Lots of debate of where the multiple can go — very good back and forth from both sides in TMTB Slack here:
